My Asshat Governor

As if it hasn't been proven time and again, here is more proof that Governor Schwarzenegger is in way over his head. In light of the special election a few weeks ago that delivered a crushing defeat to all but one of the his ballot initiatives, Schwarzenegger has announced a new series of cuts-- to the state's welfare-to-work program, low income children's health insurance, and higher education. Why are these cuts needed? Because he and his slimy band of reptilian Republican obstructionists refuse to raise taxes.

Especially galling is that the cut to the welfare-to-work program cuts only $1.3 billion from the budget, but cuts the state out of a $4.2 billion matching grant from the federal government. And the children's health care cuts? A savings of $250 million that cuts health care for around 1 million low income children. This looks awfully bad in light of one of Schwarzenegger's first moves as Asshat In Chief: cutting registrations fees for cars (a move that costs California $3.6 billion a year).

I know what the right says-- Californians are over taxed as it is. California's tax burden is second only to 'Taxachutsetts' in grand socialist mythology. As LA Times columnist Michael Hiltzik pointed out only a few days ago, California actually has the 18th highest tax burden, and that the wealthiest in California have the lowest effective tax rate of all Californians. The poorest have the highest tax burden, and that divide has increased in the last round of budget cuts and tax hikes-- the recent deal raised the effective rate on the rich to 7.8%. The rate for the poorest Californians is now 11.1% (compare that to the previous rates, 7.4% and 10.2%). Hell, cigarettes are cheaper in California than in Texas. A lot of this has to do with property taxes, which are much lower in California. I owned a home in Texas, and the property taxes were almost twice as high as those I pay now-- and I paid more than double for the home here. The idea that Californians have an excessively high tax burden is one myth that needs to die. Seriously, are cheap car registration fees worth forgoing billions in federal welfare aid and cutting health insurance and college educations for California children?

Well done, gov. Insert slow, sarcastic applause here. Recall, anyone?

Avoiding the AMT (and completely missing the point...)

"My sense of it is that the people who introduce these provisions know exactly who is going to benefit."

Thus spake Howard Gleckman, senior research editor for the Tax Policy Center, regarding an IRS report stating that 7,389 federal tax returns with over $200,000 in adjusted gross income paid no federal income tax in 2005. That amounts to a 75% increase over the previous year (these are the most recent data available from the IRS).

The reason seems to be some small, but nonetheless powerful, changes to the tax code in 2004 and 2005. One change was allowing people to eliminate up to 100% of the alternative minimum tax liability by receiving credits on taxes paid to foreign governments. Seemingly innocuous, right? After this change, the claims on foreign tax payment credits went from $16 million to $447 million in one year. In other words, legislators put a little loophole in the AMT that obviously had some benefit to some very wealthy people. Ah, the Bush Tax Cuts.

In any event, I agree with Howard.